Archive for April 2010

President Calvin Coolidge once said, “The chief business of the American people is business.”

How can we encourage job creation? Here are a few ideas:

Promote entrepreneurship. No one is guaranteed a job, and not everyone wants to work for someone else. We need to encourage entrepreneurship. We could create entrepreneurship seminars and invite guest speakers to schools. We could ask companies and non-profits to offer internships in which students shadow the CEO, instead of answer the phones. We could work with schools to create a Student Innovation Expo, with student crafters and chefs; the best ideas could be highlighted in short “infomercials” on local TV stations and people could vote on ideas, make suggestions, and buy the products.

A payroll tax holiday. Reduce or eliminate the state payroll tax (income tax withholding) for 1 year. The money that companies save could be used to grow the business, hire more employees, or off-set higher wages and health insurance.

New hire tax credits. Give employers a tax credit for each new part-time or full-time employee hired for at least 9 months in Hawaii, especially if they were previously receiving unemployment benefits. This immediately encourages businesses to hire and reduces unemployment payments. Governor Linda Lingle has already suggested this, stating “The income tax credit proposal grants credits equal to the wages withheld by the employer for each new, full-time permanent position filled by a resident who is currently receiving unemployment benefits” (Hawaii “State of the State” address 1/25/10).

Tax-deductible health insurance premiums and medical costs. Right now, the IRS only lets you deduct medical expenses if they are more than 7.5% of your income. Making all medical expenses (health insurance premiums, unreimbursed co-pays, and out-of-pocket medical costs) 100% tax-deductible would help everyone, regardless of whether they have health insurance.

If it were easy to create jobs, we would already be doing it, right? But these suggestions don’t cost a lot of money (unless you count the tax revenue the government wouldn’t collect).

We don’t need an artificial stimulus bill. We need to grow our economy to the point where it can support higher employment. How else can we help people launch or grow their business?

Hawaii’s public education system is full of discord and disharmony. Contract negotiations have fallen through again and again, while furlough days continue. The State, the unions, teachers, politicians, parents, and taxpayers blame each other.

We need to work together to resolve all of the anger, blame, and bad feelings that have grown out of an economic downturn and an expensive public education system.

We need a traditional Hawaiian ho’oponopono for public education.

Ho’oponopono: setting to right; to make right; to correct; to restore and maintain good relationships among family, and family-and-supernatural powers. The specific family conference in which relationships were “set right” through prayer, discussion, confession, repentance, and mutual restitution and forgiveness. [“Nānā I Ke Kumu” (1972) by Mary Kawena Pukui, page 60]

I think that we should ask Governor Linda Lingle; Wil Okabe, president of the Hawaii State Teachers Association; Garrett Toguchi, chairman of the Board of Education; a parent representative, perhaps from Save Our Schools; and a student representative to the Board of Education to come together and heal the negative emotions that have entangled almost everyone in Hawaii.

According to Mary Kawena Pukui, ho’oponopono is practiced with a leader or moderator who has complete authority. All discussions are channeled through the leader, and everyone agrees to participate with truthfulness and sincerity (‘oia’i’o).

The practice of ho’oponopono involves:
1. An opening prayer (pule).
2. A statement of the problem (kūkulu kumuhana).
3. The “setting to right” of each layer of successive problems (mahiki) through self-scrutiny and discussion of individual conduct, attitudes, and emotions; questioning by the leader; honest confession; a plan for restitution; and mutual forgiveness (mihi) and release (kala). A period of silence (ho’omalu) may be called at any time to calm tempers or encourage self-reflection.
4. A closing prayer (pani).
5. A feast (‘aha ‘aina).

In old Hawaii, ho’oponopono reconciled warring chiefs and resolved family arguments. I think we can adapt ho’oponopono to solve a modern community-wide problem. However, I suggest that any information revealed during ho’oponopono may not be used in a lawsuit or legal action.

Who would you suggest as a helping-healing kahuna or respected kupuna? Who has the spiritual authority to set our public education to right?

This month, as we struggle with complicated federal and state tax returns, we will also be celebrating Tax Freedom Day – the day we stop paying for government and start earning money for ourselves.

How can we keep more of our hard-earned money? Here are two suggestions:

#1 Replace the general excise tax with a reasonable sales tax. Let’s repeal the Hawaii GET, which taxes all business transactions, from wholesale to retail – and replace it with a reasonable state sales tax on retail-level goods, with fewer tax credits. It would stimulate consumer spending, lower the cost of goods, and encourage business growth.

With the general excise tax: If you spend $100 for groceries on Oahu, you pay $4.71 in general excise taxes ($4.17 on the neighbor islands). The store’s earnings are inflated to $104.71, making it seem as if Hawaii’s economy is stronger than it is.

With a comparable sales tax: if you spend $100 for groceries on Oahu, you pay $4.50 in sales taxes ($4 on the neighbor islands). The store’s earnings are accurately reported at $100.

Saving 21 cents for every $100 you spend may not seem like a lot, but it amounted to $91,534 in overpaid taxes in 2008,in addition to general excise taxes at the wholesale, manufacturing, and production levels. The general excise tax also hits us on food and medicine – basic necessities that are often exempt from a sales tax.

#2 Create a flat state income tax. It may sound crazy, but it would make our lives easier. More people would file taxes, there would be fewer errors, and we would save money on paperwork and auditing. Right now, the Hawaii tax code (Title 14) is 340 pages long, with an additional 296 pages in administrative rules (Title 18). The income tax instructions are 56 pages long just for Hawaii residents (40 pages long for the “short form”).

Six states already have a flat rate personal income tax: Colorado (4.63%), Illinois (3%), Indiana (3.4%), Massachusetts (5.3%), Michigan (4.35%), Pennsylvania (3.07%), and Utah (5%). Two states, New Hampshire and Tennessee, tax only dividends and interest income. To be fair, states like Illinois and Michigan are in fiscal trouble – but all the states are facing the effects of irresponsible spending, unfunded pension liabilities, Medicaid costs, and unemployment.

A flat state income tax could also attract new residents and businesses to Hawaii, who are fed up with complicated and confusing taxes in other states (and lured by the great weather and close proximity to Asian markets).

We all need to pay taxes, because we all need roads and infrastructure, public safety, schools, parks, and national defense. But paying taxes should be as simple and reasonable as possible.

What do you think? Can we use taxes to encourage hard work and thrift, instead of waste and spending?

Senate Bill 2401, which was approved by House Representatives, eliminates many GET exemptions – including the GET exemption on community association maintenance fees. This means that home and condominium associations would be charged the GET, and would have to cut their services or raise maintenance fees to cover the tax.

This proposed tax will penalize homeowners associations for providing services that otherwise the State government would have to provide, such as security guards, landscapers, and maintenance workers, Representative Kymberly Pine (R, Ewa Beach-Iroquois Point) pointed out (“SB2401: Homeowners association dues to be taxed,” HawaiiFreePress.com, 4/9/10).

Homeowners associations are not formed to make money – associations pay for employees, water, sewer, utilities, trash pickup, insurance, and property taxes. They often have clean, well-landscaped parks and common areas that beautify the neighborhood, or start neighborhood watches for better security.

This proposed tax on maintenance fees is unfair and unreasonable. It is also double-taxation.

We need to tell our representatives in the Hawaii Legislature that we oppose the GE tax on maintenance fees. And we need to watch any legislators who support this proposal and vote them out of office.

Let’s ignore, for the moment, the fact that the IRS tax code is over 44,000 pages, is so complicated that even tax experts don’t understand it, and desperately needs simplification. Let’s ignore the benefits of a national sales tax or a flat income tax.

Think about this: like a tree struggling to shade us from harm, our tax system needs more sunshine, more pruning, and a lot less graft.

In fact, we are growing the wrong tax tree entirely.

Our current tax system is an overgrown banyan tree, with roots extending down and spreading over the whole economy. The federal government has higher income tax rates, ranging from 0% to 35%. The states have lower income tax rates, ranging from 0% to 11% – with Hawaii at the top – but are dependent on federal funds and must comply with unfunded mandates.

It makes more sense to have a tax system like a strong pine tree, simple and orderly. The federal government, which has national responsibilities and a larger tax base, should have lower tax rates. The states, which directly care for citizens but have smaller tax bases, should have higher tax rates and not rely on the federal government for funding.

The only rational explanation for this upside-down, overgrown tax code is that the federal government wants the power to redistribute taxes among the states. They want to create welfare states and ensure that states are dependent on the federal government.

Does this make non-sense? Do you have another explanation – or better yet, solution? Does anyone have ideas about how states can reclaim their power and independence from the federal government?

“Managing with Aloha: Bringing Hawaii’s Universal Values to the Art of Business” (2004) by Rosa Say, founder of Say Leadership Coaching, is a reference guide for managers about managing with aloha.

The basis of Say’s management philosophy is Aloha (unconditional love): the belief that “your staff is innately good, worthy of the faith you place in them, and capable of great things” (page 22).

With enthusiasm and optimism, Say describes managers as teachers, coaches, and mentors, not babysitters; and highlights the “O words” of management: “others, operations, organization, and optimization” (page 172).

Through personal experiences, Say examines 19 Hawaiian values that can improve your management practices and make your business more successful. Here are six values that I think are noteworthy:

‘Imi ola (seek life and purpose): write professional mission statements for yourself and your employees. Goals should be realistic, achievable, meaningful, fun, and rewarding.

‘Ohana (family): make employees and their families, customers, guests, and vendors part of your ‘ohana. Support your community.

Kuleana (personal responsibility): give employees responsibility, allow them the opportunity to achieve, and trust them to get things done.

Mahalo (thankfulness): thank your employees in front of others and show your appreciation. List the things you have in your job right now, and describe how you will use what you have in a way that celebrates your thankfulness for having it. Start a “Mahalo log” for your employees.

Pono (rightness and balance): choose a job that is right for you, balancing your values with your company’s values. Find a balance between work and personal life.

A key point for businesses, leaders, managers, and employees: “Strive to be your best, not just better than someone else” (page 76).

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